Progress Software Reports 2% Revenue Growth, 49% Net Income Increase in Q3 2024

Progress Software Corporation reported a solid financial performance for the three and nine months ended August 31, 2024, with notable increases in revenue and profitability compared to the same periods in 2023. The company generated total revenue of $178.7 million for the third quarter, a 2% increase from $175.0 million in the prior year. For the nine months, revenue rose to $538.4 million, up 4% from $517.5 million. This growth was primarily driven by the full contribution of revenue from the MarkLogic acquisition, which was completed in February 2023.

Gross profit for the third quarter was $149.6 million, reflecting a 5% increase from $142.1 million in the same quarter of 2023. For the nine-month period, gross profit also increased by 5% to $444.5 million from $424.6 million. The company's income from operations surged by 37% in the third quarter to $40.3 million, and by 16% for the nine months to $102.5 million. Net income for the third quarter reached $28.5 million, a significant 49% increase from $19.1 million in the prior year, while net income for the nine months was $67.3 million, up 23% from $54.9 million.

Progress Software's cash and cash equivalents as of August 31, 2024, stood at $232.7 million, a substantial increase from $127.0 million at the end of November 2023. This increase was attributed to proceeds from the issuance of convertible senior notes and improved cash flows from operations. The company reported net cash flows from operating activities of $191.8 million for the nine months, compared to $140.8 million in the previous year.

Strategically, Progress Software announced the acquisition of ShareFile from Cloud Software Group for approximately $875 million, expected to close in the quarter ending November 30, 2024. This acquisition aims to enhance the company's capabilities in document-centric collaboration and workflows. Additionally, the Board of Directors has suspended the quarterly dividend to redirect capital towards debt repayment and future mergers and acquisitions.

The company also faced challenges, including costs related to the MOVEit vulnerability, which impacted its MOVEit Transfer and MOVEit Cloud products. However, these products represented less than 4% of total revenue for the nine months ended August 31, 2024. The company is involved in ongoing litigation related to this incident but believes that the outcomes will not materially affect its financial position.

Overall, Progress Software's financial results reflect a strong operational performance, bolstered by strategic acquisitions and effective management of costs and cash flows.